If you are interested in broad exposure to the Healthcare – Broad segment of the equity market, look no further than the Invesco S&P 500 Equal Weight Health Care (RYH) ETF, a passively managed Exchange Traded Fund launched on 1/11/2006.
While being an excellent vehicle for long-term investors, passively managed ETFs are a popular choice with institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Investor-friendly sector ETFs offer many options for gaining low-risk, diversified exposure to a broad group of companies in particular sectors. Healthcare – Broad is one of 16 broad Zacks industries within the Zacks Industry classification. It is currently ranked 6, placing it in the top 38%.
The fund is sponsored by Invesco. It has amassed over $1.01 billion in assets, making it one of the largest ETFs attempting to match the performance of the Healthcare – Broad segment of the stock market. RYH aims to match the performance of the S&P 500 Equal Weight Health Care Index before fees and expenses.
The S&P 500 Equal Weight Health Care Index equally weights healthcare stocks in the S&P 500 Index.
Because cheaper funds tend to outperform more expensive funds, assuming all other factors hold the same, it’s important for investors to pay attention to an ETF’s expense ratio.
The annual operating expense for this ETF is 0.40%, making it on par with most similar products in the space.
It has a 12-month trailing dividend yield of 0.62%.
Sector exposure and key holdings
While ETFs offer diversified exposure that minimizes the risk of any single stock, it’s still important to review a fund’s holdings before investing. Fortunately, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has the heaviest allocation in the healthcare sector, approximately 100% of the portfolio.
Looking at individual holdings, Moderna Inc (MRNA) accounts for approximately 1.70% of total assets, followed by Universal Health Services Inc (UHS) and Align Technology Inc (ALGN).
The top 10 equity investments represent approximately 16.37% of total assets under management.
Performance and risk
The ETF has added about 2.43% so far this year and is down about -2.44% over the past year (as of 16/01/2023). Over the past 52-week period, it traded between $249.96 and $315.41.
The ETF has a beta of 0.87 and a standard deviation of 23.20% for the trailing three-year period, making it a medium-risk pick in the space. With approximately 65 holdings, it effectively diversifies company-specific risk.
The Invesco S&P 500 Equal Weight Health Care ETF has a Zacks ETF Rank of 3 (Hold), which is based on the asset class’s expected return, expense ratio and momentum, among other factors. Therefore, RYH is a sufficient option for those looking for exposure to the healthcare ETF market area. Investors may also want to consider a few other ETF options in the space.
Vanguard Health Care ETF (VHT) tracks the MSCI US Investable Market Health Care 25/50 index and the Health Care Select Sector SPDR ETF (XLV) tracks the Health Care Select Sector index. Vanguard Health Care ETF has assets of $17.33 billion, Health Care Select Sector SPDR ETF has $41.58 billion. VHT has an expense ratio of 0.10% and XLV charges 0.10%.
To learn more about this product and other ETFs, select products that match your investment goals, and read articles on the latest developments in the ETF investing universe, visit the Zacks ETF Center.
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Invesco S&P 500 Equal Weight Health Care ETF (RYH): ETF Research Reports
Universal Health Services, Inc. (UHS): Complimentary Stock Analysis Report
Align Technology, Inc. (ALGN): Free Stock Analysis Report
Moderna, Inc. (MRNA): Free Stock Analysis Report
Health Care Select Sector SPDR ETF (XLV): ETF Research Reports
Vanguard Health Care ETF (VHT): ETF research reports
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